This Little Piggy (18)
Chapter 14. Tennis Anyone? “SAM, ITS MICHAEL We’ve been talking back here.” “That’s dangerous with you guys,” teased Sam. “While we’re waiting for the SEC to get off their ass, we thought it might be useful to start developing specific programs to increase deal flow when we’re officially family. Since you’ve got the most significant operating experience, we thought it might be invaluable to pick your brain for a day or so.” Nachman’s ego bit immediately. “So why don’t we make a little business retreat out of it?” said Sam. “Fly into LA, stay overnight at the Beverly Hills house and after breakfast James can drive us down to my La Costa place. We can brainstorm, get a little sun and play some tennis. Ever been to La Costa?” “Actually, not.” “You’ll love it. The weather is spectacular, always a perfect seventy degrees. People come from all over the world to stay there. My place is right on the grounds so you’ll have full run of the facilities. Play much tennis?” “Sam, I’m a city boy. But I’m reasonably athletic and I’m game.” “Not a problem. My tennis pro can give you a few lessons right at the house.” The trip sounded like a lot of fun. But that wasn’t exactly how he positioned it to Sandra. “Hon, I’ve got to schlep out to the coast for a few days and babysit Sam Nachman. The SEC is taking longer than we expected to approve the offering, so Bob thought a little smoozing might be in order.” “Well, he certainly picked the right person,” said Sandra. “Your clients used to tell me you were the king of smooze.” “Really?” “So what festivities have you organized?” “Honey, it’s not that kind of trip. The guy is sixty years old, for Christ sake! My mission is to get a contract extension.” “Why? Is there a problem?” “I don’t think so. Tom said the SEC has such a backlog everything is taking longer. The extensions are just for insurance.” “Mind if I come? I’ve got some extra vacation days. ” Michael had lied himself into a corner. But he was also getting pretty good at lying his way out. “Great baby! But here’s the deal. We’re meeting at some little retreat he’s got in the desert about forty miles from San Diego so we won’t be disturbed. And his wife, Anke, is staying in LA because she promised to baby sit her youngest grandchildren. So you’ll have to entertain yourself.” “What a guy! I can choose between watching you guys fall asleep snoring in the dessert or play baby sitter with somebody’s screaming grandkids. No thanks. I’ll think I’ll take a rain check.” * A SMUTTY BLONDE, with a body to die for, entered Nachman’s limousine. “Michael, say hello to Tonya, my traveling tennis pro. She’ll be making the trip to La Costa with us.” Nachman smiled lecherously, “We’ve arranged for Tonya to give you all the lessons you need….tennis lessons. Right Hon?” She undressed Michael with her eyes, causing an instant hard-on. The Carlsbad weather was exactly as advertised—spectacular. Sunny, mid seventies, slight breeze and not a speck of humidity. The house, a symphony of mirrors, felt like a Ravi Shankar experiment in transcendental distortion. “See those houses on the ridge overlooking the Club?” pointed Sam. “When I built this place eight years ago there was nothing but open space.” Since Michael didn’t own a second house, much less a third, he saw the hills differently. La Costa was surrounded by lush, verdant hills with a few small ho2using developments. “I’m starved. How about we grab some breakfast at the club then I’ll show you around the facility.” Nachman strutted around La Costa like royalty. After breakfast, Nachman and Michael walked over to center court where a slightly paunchy black man grunted and groaned his way to victory against a gray haired opponent at least twenty years his senior. “Hi Sam,” said the perspiration soaked man after the match. “Jesus, Bill, no wonder you beat the old guy. Look at the size of that racket!” “Hey man, it’s about surviving. That’s what growing up in Philly does to you,” said the man. “Bill, say hello to my business associate Michael Martini.” “Michael, this is Bill Cosby.” Cosby responded, “Michael, good to see you again. Have you and Sandra tried the cappuccino machine?” “Yeah, the thing is fabulous,” said Michael.” “My agent, Rick Hersh at William Morris, had nothing but nice things about the way you constructed the new contract.” “I take it you guys know each other?” said a surprised Nachman. “Yeah,” nodded Cosby. “This is the guy who made sure old Bill will be eating JELL-O pudding for another ten years.” “Hey Bill, you’ve been a great ambassador for the brand. I just thought a ten-year deal was appropriate for both sides.” Sam was impressed. Michael was Hollywood! Just like him. “Ready for a few lessons?” asked Sam. Michael had bad vibrations as his mind replayed video clips of his first jog with Bob at the Vertical Club. Tonya, dressed in a skimpy see-through tennis outfit began to warm up, causing heads to twirl 360 degrees. “Hon, time for Michael’s first lesson.” As a starter, Tonya performed her famous cock-tease, rubbing her crotch against Michael’s butt as she demonstrated how to serve with power and accuracy as his organ about ready to erupt, Tonya suggested a little exhibition—“Michael, let’s volley and see what you’ve learned.” Moments later Tonya had Michael huffing, puffing all over the court as if to punctuate who was in charge. Nachman laughed his ass off, “Michael, tomorrow we’ll give you a break. You can play me.” A few hours later, Tonya gave another scintillating performance… at the dinner table. Her mouth erotically caressed and chewed and swallowed---as Michael and Nachman sat motionless and mesmerized. Two nightcaps later, the threesome retired---Nachman to the master bedroom at one end of the house, Tonya to a guest room at the other end and Michael to a 2,000 square foot suite, dead center on the second floor with a magnificent golf course view. A restless Michael fantasized about Tonya as the television flickered, the door slightly ajar. As his eyelids heavied, Tonya’s shadow glided past his door down the hall to Nachman’s bedroom. The clock read 2 a.m. The next morning at breakfast—sans Tonya—Michael gave Nachman his version of the truth. “Sam, we’ve run into a bit of snag with the SEC because of the related party transactions between you and Fred.” “What the hell does that mean?” “In plain English, they claim you guys are not two separate companies. That you’re using the financing as an excuse to bilk the public.” “We’re not going to let them get away with that, are we?” said a personally affronted Sam. “No, but it’s going to take some time to work through the issues. You know bureaucrats.” Nachman smelled the opportunity to squeeze more out of his deal. “Bottom line, we’re need a contract extension,” said Michael. “What a bitch. Who else knows?” said Nachman. Michael pissed in Nachman’s pocket big time, “Nobody. I came to you first. I told Bob The Nachman Company is obviously the critical round one acquisition.” “How long do you need?” “On the safe side? Twelve months.” “Let me talk to Marty, I’m sure we can work something out. Consider it done.” * “HOW WAS THE TRIP?” said Sandra. “Jesus, do I have to explain every last detail every time I come home. I don’t ask you to explain every patient operation, every hospital crisis, do I?” exploded Michael. “That is a damn rude response. I didn’t mean anything by the question. Obviously, something happened. What the hell is going on. I have a right to know. I’m your wife.” “The meeting with Nachman turned out to be a little more complicated than I thought. That’s all.” Sandra glared. Michael knew his response would not suffice. “I had to negotiate a few deal points behind Marty’s back because Bob and I knew Marty would never agree without holding us hostage again.” “Who’s Marty?” “He’s Nachman’s shit bag, high-powered attorney. His favorite negotiating tactic is a dagger through the heart” “So how do you really feel about him?” Michael smiled. Sandra then threw a dagger of her own. “By the way, a lady by the name of Tonya called. She said you forgot your tennis racket. She gave it to Sam.” ######### Chapter 15. Shifting Gears MICHAEL RETURNED TO THE OFFICE feeling pretty good about the Nachman trip ---save Sandra’s tennis racket issue. Then Bob dropped the latest bombshell. “ Lou ran the latest numbers while you were in California. Did you know we’re running out of fucking money? We have four months of cash left at the current burn rates.” Bob squarely placed the blame on Michael’s shoulders. “I thought you were watching the goddamn store?” Bob was right. Michael had become so preoccupied with the sexy stuff—the acquisition hunt, the high-powered attorney conferences and the media interviews—he had ignored the basics of cash management. “Shit, did you know we are spending seventy-five dollars a day on fresh flowers and two hundred dollars a week on cabs for our administrative assistants?” “No,” said an embarrassed Michael. “And, what the hell really happened in Washington? According to you and Tom, we had a great meeting. Kugle calls me yesterday to say the SEC sent Delano Mondrain Hudson a fucking three-page request for more information. Those bastards want to put us out of business.” “Have you told Phil?” “No,” said Bob. “I thought you should tell him. He seems to respond better to your version of the truth.” “Scarborough will probably go ballistic,” said Michael. “But at least the Nachman contract extension gives us something positive to report.” “What does he want?” asked Bob. “I’m not sure he wants anything. He said he needed to talk to Marty.” “Trust me, he’ll want!” * “PHIL, WE JUST GOT THE WORD,” said Michael sitting across from Scarborough. “We’re having a devil of a time with the SEC.” “Pourqoi?” said Scarborough leaning back in his chair. “Kugle told me we were a slam dunk.” Michael spewed the litany: the contentious tone of the SEC meeting, their subsequent request for even more data and the day-old cash flow bombshell. Bob sat quiet as a church mouse figuring he’d let Michael take the hits. “Christ, what a mess,” groaned Scarborough deeply concerned about his reputation. “Herb and the partners are going to be absolutely furious.” Michael accented the positive. “Phil, I think we can manage our way through the minefields. Sam’s already agreed to a twelve-month extension. I’m pretty sure I can get the rest will follow suit.” “Michael, you better move quickly so nobody bails. I’m willing to make visits, place calls, whatever it takes.” Scarborough paused.” What does Nachman want?” “I’m not sure,” said Michael. “He wants to talk to Marty.” “ Not to worry, Phil” said Bob making like a knight in shining armor. “I’m planning on personally negotiating the extensions. Michael’s done a good job, considering his experience and all. Trust me, I’ve dealt with characters like this before.” Scarborough knew the acquisitions weren’t going anywhere. Where else could they get the kinds of deals Bob had negotiated? So what if he gave away a little more? The real issue was the SEC roadblock. And its incumbent risk. “Given the circumstances, we probably need to change our financing strategy.” “What are you suggesting?” said Bob. “I think we better switch to a private placement.” “But Phil, a private placement is a hell of a lot more expensive than public money,” said Bob. “Besides, it will look like…” Scarborough exploded. “Bob, get off your high horse. Haven’t you noticed? Rome is burning! You’re worried about saving a few dollars. If we don’t get a financing done, ITI is history and Whitlaw & Company becomes the laughing stock of Wall Street. I’m simply not prepared to let that happen!” “Phil’s got a point,” said Michael, who saw his ‘paper wealth’ disappearing right before his eyes. “Michael, even the private placement won’t be without its pain,” said Phil calmly. “We’ll have to call in a lot of favors from our long time investors like the Harvard Fund and Milton Polgratz Industries. But at least we can get the deal done in a matter of weeks rather than futz around with the SEC for who knows how long. “ Bob was well aware that he was merely a bystander to a conversation between Michael and Scarborough. “What’s the minimum you need to close the deals and maintain an adequate operating cash reserve?” “I think fifty million will get us through the first eighteen months. By then we should have some solid operating results and be able to return to the public markets for expansion capital,” said Michael. “We also need to make a couple of other changes,” said Scarborough. Michael sensed a sledgehammer. “Such as?” “To be perfectly blunt, ITI’s cash management sucks. So, effective immediately, I want to be appointed to the Board to maintain a tighter reign on matters. As far as additional costs of the private placement, I’ll run a tab and deduct those costs from the gross proceeds at the closing.” Phil turned and glared at Bob. “And I want you to stay out of the goddamn acquisition extension negotiations. Michael and I will handle that. I’d like to avoid giving away the rest of the store!” * AT WHITLAW & COMPANY, family never got surprised. So Scarborough called a partner’s meeting for first thing the following morning. The Board Room wreaked of old money and the fumes of expensive cigars. Whitlaw & Company had twelve senior partners in addition to Scarborough. They were organized in teams containing two or three young bankers reporting to a senior partner. Teams had areas of specialization: retailing, banking, telecommunications, networking, fiber optics, semiconductors and so on. When a team found a deal they liked, it was presented to the group. Before the Firm would underwrite the deal, a majority vote of the senior partners was required. At that point, each team had to personally invest a minimum of $100,000, although there was no upper limit. Team members could split their investment however they saw fit, sometimes proportionate to dollars invested, sometimes not. The senior partner ultimately made that determination. This rigorous process, instituted some forty years ago, was generally credited with the Firm’s enviable record of success. Clients knew Whitlaw & Company had never failed to complete a financing on any of its endorsed deals and investors knew the Firm’s ability to pick winners was extraordinary. Phil had the embarrassing job of informing his peers that ITI might be the first financing failure in its illustrious history. Scarborough went right to the bottom line. “Gentleman, late yesterday I received a disturbing briefing from ITI management. The public offering is in peril. They have had some bad breaks but candidly I should have watched the store more closely.” Scarborough laid out the issues precisely and efficiently, yet spared nothing. After twenty-two years, he knew the way the game was played at Whitlaw & Company—the problem was his to fix. “To give the Company time to resolve it’s differences with the SEC, I’m recommending we shift from a public offering to a private placement. I also agreed to personally provide the Company a two million dollar unsecured, non-interest bearing bridge loan to alleviate cash flow pressures until the placement is completed.” A battle hardened, chunky, sun-tanned partner, Stanley Starker, challenged Scarborough’s logic, “Phil, while it’s admirable you’re willing to throw more of your own money at the deal, we need to ask ourselves are we throwing good money after bad? While I wouldn’t be happy about losing a hundred grand, it’s not exactly the end of the world.” “Stan, I’m not ready to close up shop yet. I still believe these guys have got an enormous business concept,” responded Scarborough. “But candidly, I’m not a hundred percent sure anymore, that’s why I’m willing to take the majority of the risk.” “Phil, I think I speak for everyone here,” said the tall slender Chairman, Herb Whitlaw Junior. The Firm will support your decision. You’re closer to the deal than any of us. And., if you say ‘go,’ we’ll work our butts off to call in favors. “Herb, I appreciate the endorsement,” said Scarborough. “However, on a purely visceral level,” said Whitlaw, “Goldstrom has a stench about him—even ten years later.” Scarborough knew it was time for a ‘Come to Jesus Meeting’…with Michael. “Can you come over for lunch tomorrow? I’d like to speak to you privately. Do we understand each other?” It felt like déjà vu to Michael. The day Ed Ney summoned him to his office, he felt like he was about to be canned. This time he was certain Whitlaw & Company wanted out. Why tell me? Bob’s the one with the twenty-five percent! I’ve only got a puny twenty million shares. Are they going to sue me personally for misrepresentation? Am I getting canned because of the cash management fiasco? “Be delighted Phil. What time?” said Michael. “About noon. My office. * “GOOD AFTERNOON MR. MARTINI,” said the cheery face at the elevator door. “Mr. Scarborough is waiting for you in Dining Room C.” “Hope you don’t mind. I took the liberty of having Duane prepare some lunch,” said Scarborough placing his hand in Michael’s. “Veal Saltimbucca okay?” Michael looked around. The sun-filled dining room overlooking Fifth Avenue was a maze of fresh flowers, paisley print linens, Lennox China and Waterford Crystal. Hardly the stuff of a convicted felon’s last meal, thought Michael. Gratuitous opening ceremonies were ditched. Scarborough sprinted for the finish line as the ice water was being poured. “Michael, I’ve gained a great deal of respect for your business acumen in the short time we’ve worked together.” “Thanks.” “Giving credit where credit is due, Bob is a fabulous promoter. But the truth to him is what he thinks you want to hear at that moment!”
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Copyright © 2004 Matt Crisci |